Yeocheon NCC Finalizes Raw Material Supply Contract on December 12
"Fully Agrees with Government's Petrochemical Restructuring Direction"
"Promises Employment Stability... Internal Redeployment a Priority"
DL Chemical has officially mentioned a reduction scenario in which, in addition to closing the third plant with an ethylene capacity of 450,000 tons during the Yeocheon NCC restructuring process, it is also considering shutting down one large naphtha cracking center (NCC) with a capacity of 900,000 tons. After more than a year of negotiations over raw material prices with Hanwha Solutions, a joint shareholder in Yeocheon NCC, the focus of discussions has shifted from 'pricing issues' to 'reducing production capacity itself.'
On the 15th, DL Chemical stated, "We fully support the petrochemical restructuring direction being promoted by the government," and added, "Assuming a reduction in NCC production capacity, we will take full responsibility for restructuring, including the shareholder portfolio and downstream businesses." The company further explained, "Depending on the NCC capacity reduction options, shutting down one large plant, which is bigger than the third plant, may be more reasonable from a profitability perspective." This statement reflects DL Chemical's intention to strengthen responsible management of Yeocheon NCC. It is the first official position since Yeocheon NCC signed a raw material supply contract with DL Chemical and Hanwha Solutions on December 12.
Until now, discussions on Yeocheon NCC's restructuring have focused on closing the third plant, which has an ethylene capacity of 470,000 tons. Based on the facilities slated for shutdown, measures such as workforce reassignment, organizational streamlining, and cost reduction have been reviewed, but recently, the baseline has shifted even further downward.
Currently, Yeocheon NCC operates three NCC units: Plant 1 with a capacity of 900,000 tons, Plant 2 with 915,000 tons, and Plant 3 with 470,000 tons. DL Chemical cited the deterioration of Yeocheon NCC's cost structure as the reason for this decision. The company stated, "The 2025 performance has worsened by more than 300 billion won compared to the initial business plan (at the break-even point)," and added, "If we do not simultaneously pursue cost recovery and production capacity reduction, additional financial burdens will be inevitable."
DL Chemical also plans to carry out downstream restructuring on the premise of NCC capacity reduction. Product lines with low profitability and structural competitiveness will be phased out, while some facilities will be converted to produce high value-added products.
The company also expressed its intention for shareholders to take direct responsibility for employment and financial obligations. DL Chemical stated, "During the restructuring process, surplus personnel will first be considered for internal reassignment, and even if additional staff reductions are necessary, we will do our utmost to ensure employment stability." The company added that if, after all self-help efforts, Yeocheon NCC faces liquidity issues due to worsening market conditions, it does not rule out providing additional financial support as a shareholder. Kim Jonghyun, Vice Chairman of DL Chemical, said, "We will not shift responsibility to others under the name of restructuring," and added, "We will pursue restructuring in which shareholders take responsibility for downstream reorganization, as well as employment and financial stability."
Negotiations with Hanwha, the major shareholder of Yeocheon NCC, are expected to be challenging. A representative from Hanwha Solutions said, "We are reviewing various options as part of the government-led business restructuring process," and added, "This is not something DL Chemical can decide on its own. We will monitor developments within the Yeosu Industrial Complex."
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